GDP for Q2 came in at 2.5%, significantly lower than Q1 and consensus estimates. Core inflation up 2.3% YOY, an 11 year high, core PCE up 2.9%, a 12 year high.
The U.S. economy grew at a 2.5 percent annual pace from April through June, less than expected, as business investment in equipment fell for the first time in three years and consumers reined in spending.
The government’s first estimate of the quarter’s gross domestic product, the value of all goods and services produced in the U.S., compares with a 5.6 percent gain in the first three months of the year, the Commerce Department reported today in Washington. A measure of core inflation accelerated.
The government’s personal consumption expenditures index, a measure of prices tied to consumer spending, rose 4.1 percent after a 2.0 percent rise in the first quarter. The index excluding food and energy, a measure favored by Fed policy makers, rose at a 2.9 percent annual rate after a 2.1 percent rise the previous quarter.
The GDP price index, a measure of prices tied to the report, held at a 3,3 percent annual rate in the second quarter.
Consumer spending weakened in the April through June period, residential investment fell further and business investment eased to the slowest growth in more than two years. Investments in business equipment and software declined for the first time in three years. Inventory accumulation and trade added to gross domestic product in the quarter.
Meanwhile, core consumer prices rose 2.9% annualized, the fastest pace in 12 years, keeping the pressure on the Federal Reserve to stay on top of inflation. Core consumer prices have risen 2.3% in the past year, the fastest growth since 1995.
The GDP price index, which covers all prices in the economy, increased 3.3% for the third straight quarter. Consumer prices including food and energy increased at a 4.1% pace.